14 February 2011
It’s necessary to understand that rate forecasts shouldn’t be the only criteria for making your mortgage choice – at that moment (spring 2010) analysts predicted a sharp rate increase.
In addition to it, Milevsky says it’s important to consider getting a fixed rate in the situation when you have small downpayment and not sure if you could withstand few rate hikes. In his opinion, today borrowers “are facing the risk that real estate prices go down and interest rates increase.” Moreover, “with the recent possibility of job loss and many other factors a fixed rate mortgage can be perfect for those with less equity and financial resources“.
On the other hand, if you can tolerate risk, have substantial equity (downpayment) and ready for few rate/payment hikes – variable mortgage is right for you.
In other words, you should never hurry with your mortgage choice. Please, consult your mortgage advisor to see what rates, terms and conditions will be best for you.